# ECO561 ECO/561 FINAL EXAM (SOLUTION 39/39) - 75767

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1) Suppose that the price of peanuts falls from \$3 to \$2 per bushel and that, as a result, the total revenue received by peanut farmers changes from \$16 to \$14 billion. Thus:
A. the demand curve for peanuts has shifted to the right.
B. the demand for peanuts is elastic.
C. the demand for peanuts is inelastic.
D. no inference can be made as to the elasticity of demand for peanuts.
2) The advent of DVDs has virtually demolished the market for videocassettes. This is an example of:
A. capital accumulation.
B. the difference between normal and economic profits.
C. creative destruction.
D. derived demand.
3) If the demand for farm products is price inelastic, a good harvest will cause farm revenues to:
A. be unchanged.
B. either increase or decrease, depending on what happens to supply.
C. increase
D. decrease
4) Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased. Based on this information we can conclude that:
A. The supply of and demand for clothing have grown by the same proportion.
B. There is no way to determine what has happened to supply and demand with this information.
C. The supply of clothing has grown faster than the demand for clothing.
D. Demand for clothi

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